BEAVEX HOLDING CORPORATION, Et Al.,1 Debtors. Chapter

Case 19-10316 Doc 13 Filed 02/18/19 Page 1 of 36 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 BEAVEX HOLDING CORPORATION, et al.,1 Case No. 19-10316 (_____) Debtors. Joint Administration Requested DEBTORS’ MOTION FOR INTERIM AND FINAL ORDERS, PURSUANT TO SECTIONS 105(a) AND 366 OF THE BANKRUPTCY CODE (I) PROHIBITING UTILITY COMPANIES FROM ALTERING, REFUSING, OR DISCONTINUING UTILITY SERVICES; (II) DEEMING UTILITY COMPANIES ADEQUATELY ASSURED OF FUTURE PAYMENT; (III) ESTABLISHING PROCEDURES FOR DETERMINING ADDITIONAL ADEQUATE ASSURANCE OF PAYMENT; AND (IV) GRANTING RELATED RELIEF, INCLUDING SETTING A FINAL HEARING RELATED THERETO The above-captioned debtors and debtors in possession (collectively, the “Debtors”) hereby submit this motion (this “Motion”) for the entry of interim and final orders, substantially in the forms attached hereto as Exhibit B (the “Interim Order”) and Exhibit C (the “Final Order,” and together with the Interim Order, the “Proposed Orders”), respectively, pursuant to sections 105(a) and 366(b) of title 11 of the United States Code (the “Bankruptcy Code”) and Rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedures (the “Bankruptcy Rules”): (i) prohibiting the Debtors’ utility service providers from altering, refusing, or discontinuing utility services on account of pre-petition invoices; (ii) deeming the Debtors’ utility service providers adequately assured of future payment; and (iii) establishing procedures for determining additional adequate assurance of future payment and authorizing the Debtors to provide additional adequate assurance of future payment to their utility service providers and 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: BeavEx Holding Corporation (7740); BeavEx Acquisition, Inc. (5497); BeavEx Incorporated (7355); JNJW Enterprises, Inc. (4963); and USXP, LLC (2997). The headquarters for the above-captioned Debtors is located at 2120 Powers Ferry Road SE, Suite 300, Atlanta, GA 30339. 01:23576453.15 Case 19-10316 Doc 13 Filed 02/18/19 Page 2 of 36 setting a final hearing related thereto. In support of this Motion, the Debtors rely upon and incorporate by reference the Declaration of Donald Van der Wiel in Support of Debtors’ Chapter 11 Petitions and First Day Motions (the “First Day Declaration”),2 filed contemporaneously herewith. In further support of this Motion, the Debtors respectfully state as follows: JURISDICTION AND VENUE 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated as of February 29, 2012 (the “Amended Order”). This is a core proceeding pursuant to 28 U.S.C. § 157(b), and pursuant to Rule 9013-1(f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), the Debtors consent to the entry of a final order by the Court in connection with this Motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. Venue is proper in the Court pursuant to 28 U.S.C. §§ 1408 and 1409. 2. The statutory and legal predicates for the relief sought herein are sections 105(a) and 366 of the Bankruptcy Code, and Bankruptcy Rules 6003 and 6004. BACKGROUND 3. On the date hereof (the “Petition Date”), each of the Debtors commenced a voluntary case under chapter 11 of the Bankruptcy Code. The Debtors are authorized to operate their businesses and manage their properties as debtors in possession pursuant to sections 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the First Day Declaration. 01:23576453.15 2 Case 19-10316 Doc 13 Filed 02/18/19 Page 3 of 36 1107(a) and 1108 of the Bankruptcy Code. No official committees have been appointed in these chapter 11 cases and no request has been made for the appointment of a trustee or an examiner. 4. Additional information regarding the Debtors’ businesses, capital structure, and the circumstances leading to the filing of these chapter 11 cases is set forth in the First Day Declaration. RELEVANT BACKGROUND 5. In connection with the operation of their businesses and the management of their retail locations, various utility companies (each, a “Utility Company,” and collectively, the “Utility Companies”) provide natural gas, electricity, telecommunications, internet connectivity, water, waste disposal, and other similar services (collectively, the “Utility Services”) to the Debtors. Attached hereto as Exhibit A3 is a list (the “Utility Service List”) of Utility Companies providing Utility Services to the Debtors as of the Petition Date. The Utility Companies service the Debtors’ corporate headquarters in Atlanta, Georgia, as well as their service locations nationwide. The Debtors could not operate their businesses or serve their customers in the absence of continuous Utility Services. Thus, any interruption in such services would disrupt the Debtors’ day-to-day operations and undermine their ability to be profitable on a go-forward basis. 6. In general, the Debtors have established a good payment history with the Utility Companies, making payments on a regular and timely basis. Historically, the Debtors have paid on average approximately $161,000 per month on account of the Utility Services. To 3 The Debtors have endeavored to identify all of the Utility Companies and list them on Exhibit A hereto. However, inadvertent omissions may have occurred, and the omission from Exhibit A hereto of any entity providing Utility Services to the Debtors shall not be construed as an admission, waiver, acknowledgement, or consent that section 366 of the Bankruptcy Code does not apply to such entity. In addition, the Debtors reserve the right to assert that any of the entities now or hereafter included on the Utility Service List are not “utilities” within the meaning of section 366(a) of the Bankruptcy Code. 01:23576453.15 3 Case 19-10316 Doc 13 Filed 02/18/19 Page 4 of 36 the best of the Debtors’ knowledge, there are generally no material defaults or arrearages of any significance with respect to undisputed invoices for the Utility Services, other than payment interruptions that may be caused by the commencement of these chapter 11 cases. RELIEF REQUESTED 7. By this Motion, the Debtors request that the Court enter the Proposed Orders: (i) prohibiting the Utility Companies from altering, refusing, or discontinuing the Utility Services on account of pre-petition invoices, including the making of demands for security deposits or accelerated payment terms; (ii) determining that the Debtors have provided each of the Utility Companies with “adequate assurance of payment” within the meaning of section 366 of the Bankruptcy Code (“Adequate Assurance”), based on the Debtors’ establishment of a segregated account in the amount of $81,000, which equals approximately 50% of the Debtors’ estimated monthly cost of the Utility Services subsequent to the Petition Date; (iii) establishing procedures for determining additional adequate assurance of future payment, if any, and authorizing the Debtors to provide additional adequate assurance of future payment to the Utility Companies (the “Assurance Procedures”); and (iv) setting a final hearing (the “Final Hearing”) on the proposed Adequate Assurance and Assurance Procedures. BASIS FOR RELIEF REQUESTED 8. The termination or cessation (even if only temporary) of any of the Utility Services will result in disruption to the Debtors’ businesses, as well as a potential loss of revenue and profits. Any interruption of the Utility Services would diminish or impair the Debtors’ efforts to preserve and maximize the value of their estates and to successfully prosecute these chapter 11 cases. It is therefore critical that the Utility Services continue uninterrupted. 01:23576453.15 4 Case 19-10316 Doc 13 Filed 02/18/19 Page 5 of 36 9. Section 366 of the Bankruptcy Code provides that, in a chapter 11 case, during the initial thirty (30) days after the commencement of the case, utilities may not alter, refuse, or discontinue service to, or discriminate against, a debtor solely on the basis of the commencement of its case or the existence of pre-petition debts owed by the debtor. In a chapter 11 case, following the thirty-day period under section 366(c) of the Bankruptcy Code, utilities may discontinue service to the debtor if the debtor does not provide adequate assurance of future payment of its postpetition obligations in a form that is satisfactory to the utility, subject to the Court’s ability to modify the amount of adequate assurance. 11 U.S.C. § 366(c)(2). 10. The Debtors intend to pay undisputed postpetition charges for the Utility Services when due in the ordinary course of business. Nonetheless, to provide adequate assurance of payment for future services to the Utility Companies under section 366 of the Bankruptcy Code, the Debtors propose to deposit a sum of $81,000 (the “Utility Deposit”), which represents approximately two (2) weeks of the Debtors’ estimated aggregate cost for the Utility Services subsequent to the Petition Date, into a segregated account (the “Utility Deposit Account”) within twenty (20) days of the Petition Date, to be maintained during the pendency of these chapter 11 cases in the manner provided for herein and in the Proposed Orders. 11. While the form of adequate assurance of payment may be limited to the types of security enumerated in section 366(c)(1)(A) of the Bankruptcy Code,4 the determination of the amount of the adequate assurance is within the discretion of the Court. It is well established that the requirement that a utility receive adequate assurance of payment does not require a guarantee of payment.

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